Question 1

How can I find a good deal on a mortgage?

Accepted Answer

When a lender offers you a mortgage, you have to repay both the original loan amount and interest through monthly payments. The interest is the biggest cost that you have to incur on a mortgage. A good deal on a mortgage is one that offers you a lower interest rate and easy repayment terms.

You can compare the rates and other terms offered by different lenders to get an idea of what the loan will cost you. In doing so, you will find that most lenders offer pretty much the same basic terms. This is because they are all regulated to a certain extent by the government. However, there could be significant differences in several other charges like closing cost, prepayment fee, appraisal cost, legal fee etc.

Question 2

Should I hire a mortgage broker?

Accepted Answer

Hiring a mortgage broker can save you time and money. A broker has access to multiple lenders and can compare rates, terms, and products on your behalf. They handle the paperwork, negotiate with lenders, and guide you through the entire process. Brokers are especially valuable for self-employed individuals, those with unique financial situations, or first-time buyers who need expert guidance. At Legacy Mortgage Group, we work with over 50+ lenders to find you the best mortgage solution tailored to your needs.

Question 3

What is a mortgage pre-approval and why do I need one?

Accepted Answer

A mortgage pre-approval is a written commitment from a lender stating how much they're willing to lend you based on your financial situation. It's essential because it shows sellers you're a serious buyer, helps you understand your budget, locks in an interest rate for 90-120 days, and speeds up the final approval process. Getting pre-approved before house hunting gives you confidence and negotiating power in competitive markets.

Question 4

How much down payment do I need?

Accepted Answer

In Canada, the minimum down payment depends on the purchase price: 5% for homes up to $500,000, 10% for the portion between $500,000-$999,999, and 20% for homes $1 million or more. With less than 20% down, you'll need mortgage default insurance (CMHC, Sagen, or Canada Guaranty). A larger down payment reduces your mortgage amount, eliminates insurance premiums, and may qualify you for better rates. We can help you explore down payment assistance programs and gifted down payment options.

Question 5

Adjustable rate vs. fixed rate – which should I choose?

Accepted Answer

Fixed-rate mortgages offer stability with the same interest rate and payment for the entire term (typically 1-5 years), protecting you from rate increases. Variable-rate mortgages fluctuate with the prime rate, potentially saving you money when rates drop but increasing your payments when rates rise.

Choose fixed if you prefer predictable payments, are on a tight budget, or expect rates to increase. Choose variable if you can handle payment fluctuations, believe rates will decrease, or want the flexibility of lower penalties if you need to break your mortgage early. Your choice depends on your risk tolerance, financial situation, and market outlook.

Question 6

What's the difference between mortgage term and amortization?

Accepted Answer

The mortgage term is the length of your current mortgage contract (typically 1-5 years), during which your rate and conditions are locked in. At the end of the term, you'll renew or refinance. Amortization is the total time it takes to pay off your entire mortgage (typically 25-30 years). For example, you might have a 5-year term within a 25-year amortization. Shorter terms offer flexibility but require more frequent renewals, while longer amortizations mean lower monthly payments but more interest paid over time.

Question 7

How long can I hold a mortgage rate?

Accepted Answer

Most lenders offer rate holds for 90-120 days, meaning your approved rate is guaranteed for that period while you search for a home. If rates drop during your hold period, many lenders will honor the lower rate. If rates increase, you're protected with your original rate. Rate holds are free and don't obligate you to proceed with that lender. This protection is especially valuable in rising rate environments and gives you peace of mind while house hunting.

Question 8

What documents do I need to apply for a mortgage?

Accepted Answer

For employed applicants: recent pay stubs (2-3 months), T4s or NOAs (2 years), employment letter, bank statements (90 days), and valid ID. For self-employed applicants: Notice of Assessments (2 years), financial statements, business license, and incorporation documents if applicable. You'll also need property details (MLS listing, purchase agreement), down payment confirmation (bank statements, gift letter if applicable), and credit authorization. Having these ready speeds up your application significantly.

Question 9

What credit score do I need to qualify for a mortgage?

Accepted Answer

Most lenders require a minimum credit score of 680 for conventional mortgages with competitive rates. Scores of 600-679 may qualify but with higher rates or additional requirements. Below 600, you may need alternative lenders or private financing. Your credit score affects not just approval but also your interest rate – higher scores unlock better rates. We can review your credit report, suggest improvements, and connect you with appropriate lenders based on your score. Even with challenged credit, mortgage solutions exist.

Question 10

Can I get a mortgage if I'm self-employed?

Accepted Answer

Self-employed individuals can qualify for mortgages, though the process requires additional documentation. Traditional lenders typically require 2 years of Notice of Assessments showing stable or increasing income. Alternative options include stated income programs (requiring larger down payments), business-for-self (BFS) programs for incorporated professionals, and asset-based lending. We specialize in self-employed mortgages and can navigate the complexities to find you the best solution, whether you're a contractor, business owner, or commissioned professional.

Question 11

Things you should know about loan modification

Accepted Answer

Loan modification involves changing the terms of your existing mortgage to make payments more manageable. This can include extending the amortization, switching from variable to fixed rate, or adjusting payment schedules. Unlike refinancing, modifications typically don't require full re-qualification or appraisals.

Modifications are useful if you're facing financial hardship, want to consolidate debt, or need to adjust your payment structure. However, they may extend your repayment period and increase total interest paid. It's important to understand the long-term implications and explore all options, including refinancing or renewal alternatives, before proceeding.

Question 12

Will you get a new interest rate on a modified loan?

Accepted Answer

Yes, when you modify your mortgage, you'll typically receive a new interest rate based on current market conditions and your financial situation. The new rate may be higher or lower than your original rate depending on when you're modifying and market trends. If you're modifying mid-term, you may face penalties similar to breaking your mortgage early. However, if the modification happens at renewal, you can negotiate a new rate without penalties. We can calculate whether a modification makes financial sense by comparing your current rate, potential new rate, and any associated costs.

Question 13

What's the difference between refinancing and renewal?

Accepted Answer

Renewal happens at the end of your mortgage term when you sign a new contract with your existing lender or switch to a new one. There are no penalties, minimal paperwork, and you keep your current mortgage balance. Refinancing can happen anytime and involves replacing your existing mortgage with a new one, potentially accessing up to 80% of your home's value. Refinancing is ideal for debt consolidation, home renovations, or accessing equity, but may involve penalties, appraisal fees, and legal costs. We can help you determine which option best suits your financial goals.

Question 14

What are the rights of the mortgagor to inspect the mortgaged property?

Accepted Answer

As a mortgagor (borrower), you have the right to occupy and use your property as long as you meet your mortgage obligations. The lender (mortgagee) generally cannot inspect your property without your consent unless specified in your mortgage agreement or if they suspect the property is at risk (abandonment, significant damage, insurance lapse).

You have the right to maintain, improve, and enjoy your property. However, you must maintain adequate insurance, pay property taxes, and keep the property in good condition as these protect the lender's security interest. If you default on payments, the lender's rights to inspect and potentially take possession increase significantly. Always review your mortgage terms to understand specific inspection clauses.

Question 15

What is the impact of unemployed status on my mortgage?

Accepted Answer

Unemployment significantly affects mortgage applications as lenders assess your ability to repay. If you're currently unemployed, most traditional lenders won't approve a new mortgage without verifiable income. However, if you have substantial savings, investment income, or a co-signer with stable employment, options may exist.

If you become unemployed after getting a mortgage, contact your lender immediately. Many offer hardship programs including payment deferrals, extended amortization, or temporary interest-only payments. Mortgage default insurance may provide some protection. The key is proactive communication – lenders prefer working with borrowers facing temporary hardship rather than dealing with defaults. We can help you explore options and connect you with lenders offering flexibility during employment transitions.

Question 16

Can I get a mortgage if I'm new to Canada?

Accepted Answer

Yes! Newcomers to Canada can qualify for mortgages, often with as little as 3-6 months of Canadian credit history and employment. Many lenders offer specialized newcomer programs recognizing foreign credit history, education, and professional credentials. You'll typically need a valid work permit or permanent resident status, proof of down payment (35% is common for newcomers), employment letter, and identification.

Some programs accept foreign income and credit history, while others focus on your Canadian employment and down payment. We work with multiple lenders offering newcomer-friendly programs and can guide you through building Canadian credit, understanding the market, and securing your first Canadian home.

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